and are heading for another turbulent week, with escalating tensions in West Asia, crude oil prices hovering near $110 per barrel and rupee movements set to shape bullion sentiment, analysts said.
Investors will initially track Chinese economic data, crucial for industrial metals and silver, followed by US housing data, consumer sentiment, inflation expectations and PMI readings from major economies, including India, the UK and the US, they added.
Commodity markets will remain closed during the morning session on Tuesday on account of Dussehra.
“We expect a capped, choppy week, as gold and silver will remain volatile as escalating tensions around the Strait of Hormuz and their implications for crude oil prices keep markets on edge,” said Gaurav Garg, Head of Research at brokerage platform Lemonn.
With Brent crude surging towards $110 per barrel in global markets, concerns over energy-driven inflation could limit bullion’s upside, while easing US Treasury yields may provide some support, he said.
Gold past week
On the Multi Commodity Exchange (MCX), gold futures for December delivery declined ₹3,581, or 2.4 per cent, over the past week to close at ₹1.47 lakh per 10 grams. Silver tumbled ₹14,568, or 6.4 per cent, to settle at ₹2.11 lakh per kilogram.
Gold prices slipped below ₹1.5 lakh per 10 grams in the domestic market as the strengthening rupee weighed on prices, widening the divergence between domestic and international bullion rates, Garg said.
“The hit came from the currency. The rupee gained to the 94.8 level from about 96.8, a gain of more than 180 paise in five sessions, helped by RBI intervention and traders unwinding dollar positions,” he added.
The rupee’s appreciation reduced the landed cost of imported gold, dragging domestic prices down by more than ₹3,000 per 10 grams over four sessions, nearly five times the decline in international markets.
Silver past week
Silver, meanwhile, proved more vulnerable to concerns over interest rates and economic growth, falling more sharply before recovering to around ₹2.11 lakh per kg, Garg said, adding that traders were hit harder by currency movements than by uncertainty over the US Federal Reserve’s rate outlook.
In global markets, Comex gold futures for the December contract dipped by $35.2, or nearly 1 per cent, to close at $4,181.1 per ounce, while silver fell $3.7, or 6.13 per cent, to $57.30 an ounce.
“Gold and silver futures consolidated in a range on Friday but traded with a positive bias on short covering and bargain buying at lower levels,” said Pranav Mer, Senior Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
Bullion found some support from a weaker US dollar, as traders pared bets on an October Fed rate hike despite higher-than-expected inflation readings.
Federal Reserve officials indicated that the Federal Open Market Committee could wait for more economic data before making further policy decisions.
“Elsewhere, we don’t expect the US Fed to hike rates or give any fresh clues on their future monetary policy path ahead of the mid-term elections on November 3,” Mer said.
Analysts said the dollar’s trajectory, developments surrounding Russian crude supplies and geopolitical risks will also be closely tracked for energy markets in the coming week, as movement in crude prices is likely to feed into inflation expectations and influence the outlook for the precious metals.